As an entrepreneur, filing your income tax return is much more complex than when you’re an employee. You have to deal with different deductions, tax rules, and benefits that you can use to your advantage. With the right preparation and smart decisions, you can make filing easier and save on taxes at the same time.
Here are 12 smart tips to handle your income tax efficiently and profitably as an entrepreneur.
1. Set aside money in advance for your tax return
When you’re employed, income tax is deducted from your salary each month, so you barely notice it. As an entrepreneur, you pay it once a year — often a large amount if your profits are high.
A good rule of thumb is to set aside around 30% of your profit for taxes. This prevents nasty surprises when it’s time to file your return.
Tip: Use an online tax calculator to estimate how much to reserve.
2. Don’t underestimate your income tax return
Filing as a business owner involves more than for employees. You’ll deal with:
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A balance sheet and profit & loss statement
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Various business deductions
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Special schemes such as the SME profit exemption
If you’re unsure what to do, don’t wing it. Mistakes can lead to tax corrections or penalties. Consider hiring a bookkeeper for peace of mind.
3. Start early
Keep your records organized throughout the year — save receipts, invoices, and mileage logs.
Tax season is busy for accountants, so the earlier you start, the easier it will be to get help and avoid last-minute stress. Late filing can result in fines and interest.
4. Request an extension or apply for a provisional assessment
If you can’t file before May 1, request an extension on time.
To avoid tax interest, apply for a provisional assessment so you can prepay part of your tax during the year — helpful after a profitable year.
5. Take the entrepreneur check from the Tax Administration
The Belastingdienst determines, per activity, whether you qualify as an entrepreneur for income tax. This affects which deductions you can claim.
If you run multiple activities, fill out the check separately for each one.
6. Use entrepreneur deductions (zelfstandigenaftrek, startersaftrek, MKB-winstvrijstelling)
These are the most valuable tax benefits for self-employed people:
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Zelfstandigenaftrek (self-employed deduction): if you work at least 1,225 hours per year in your business.
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Startersaftrek: extra benefit for new entrepreneurs in their first three years.
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MKB-winstvrijstelling: automatically deducts 14% of your profit.
They can substantially reduce your taxable income.
7. Claim investment deductions
If you buy business assets such as a laptop, camera, or company bike, you may qualify for the small-scale investment deduction (KIA).
Requirements (2025): total investments between €2,900 and €70,602 per year. Bundle purchases within one calendar year to maximize the benefit.
8. Deduct legitimate business expenses
Many everyday costs are tax-deductible, such as:
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Software subscriptions
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Marketing expenses
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Office supplies or workspace rent
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Business phone use
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Mileage reimbursement for private car use
Accurate expense tracking lowers your taxable profit and tax bill.
9. Use personal deductions
You may also claim personal deductions such as:
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Unreimbursed medical expenses
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Donations to registered charities
These can reduce your overall tax burden, especially with a higher income.
10. Declare pension and disability insurance premiums
You must arrange your own pension and disability insurance (AOV). Premiums are tax-deductible, saving up to 50% in tax if you’re in a higher bracket.
Tip: Consider bank savings or an annuity policy for tax-advantaged retirement savings.
11. Use your tax partner strategically
If you have a tax partner, you can split deductions and income between you to minimize total tax.
Example: transferring the mortgage interest deduction to the higher-earning partner can increase your refund.
12. Check pre-filled data carefully
The Tax Administration pre-fills some data, but always verify:
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Cryptocurrency values as of January 1
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Pension contributions (not always correct)
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Overlooked deductions
Careful review ensures you don’t miss out on tax savings.
Optimize your income tax as an entrepreneur
With good preparation and knowledge, you can file smartly and make the most of tax benefits. Make sure you:
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Start early
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Use every deduction available
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Keep thorough records
Need help with your return? Balancify supports entrepreneurs with bookkeeping and tax matters so you can focus on running your business. 🚀
